The FA remains convinced that Stuart Pearce is the best man to manage the England's Under-21s despite the team's early exit from the European Championship last night and a source at the governing body has confirmed it has no intention of withdrawing the two-year contract extension that has been on offer to him since before the tournament. The former Manchester City manager also remains the leading contender to take charge of the Great Britain football team at next summer's Olympic Games.

That backing comes amid criticism of his team's uninspired performances in Denmark and the manager's team selections, particularly in the draws with Spain and Ukraine. His cautious tactics have provoked claims that he failed to make the most of his resources.

One of his critics is the former England full-back Danny Mills, who played under Pearce at Manchester City. Mills, who was in Denmark working as a commentator, said: "You don't win tournaments by being defensively sound alone, you've got to score goals, you have to be more proactive and look to attack teams. There wasn't a single midfield runner. Nobody went beyond the centre-forwards. Nobody took a gamble. Football is very much a game of risk and reward. You have to take risks and there weren't enough players going forward who were willing to take a risk."

"When these youngsters are playing for England they are fearful. The players have to take some responsibility for themselves. But tactics also came into play. England sat back too much and never forced the pace of the games – especially the last one when they had to win. Yes, you can be a little bit cautious in the first half, but our goal came out of nothing, not concerted pressure. At the back we were just passing the ball around for passing's sake.

"When Spain pass the ball they do so to create an opportunity for someone. We kept the ball but didn't quite seem to understand where we were going and what we were doing with it. Far too many England players stood still.

"That's why we haven't won anything since 1966. The players have got to be able to express themselves out there and the shackles have to be released. If not, it will be a long, long time before we win anything else."

Fabrice Muamba, who has played 31 times for the Under-21s under Pearce, stuck up for the manager, who took them to the final in 2009 and the semi-final in 2007. "You don't judge the gaffer on just one tournament," said the Bolton midfielder. "He took us to two semi-finals and one final. I'm sure the team in 2013 will do better."